Hi Ppl Have been reading some stuff which says which sheds some light on the availability, ease, Rate of Interest, tenure etc. It says very clearly that prior credit ratings/history would go a long way in the easing things. very logical n…
Hi Ppl
Have been reading some stuff which says which sheds some light on the availability, ease, Rate of Interest, tenure etc.
It says very clearly that prior credit ratings/history would go a long way in the easing things. very logical
now i would like to put up a discussion wherein it would be cleared on how we could improve our credit ratings here in India?
1) I dont have a credit history in USA.
2) I dont use Credit cards - i think they are the tools of Satan ;-)
3) I usually keep all my money in equities
so, any ideas how I/we could improve our credit history before joining B-schools in US?
cheers
Kunal
ok so i used humour in discussing a serious problem. does that make it look less important.
I am hoping some people who have gone through the loans process/ those who are in the process to help me out here.
Kunal
Hi Kunal,
I dont think we have the concept of a credit rating in India yet. We have credit bureaus that swap info on good/bad csts. But I dont they follow a quantitative approach to it yet.
Also, I am nt altogether sure if your credit score in your home country will have too much of an impact in securing a loan in US. From what I know, when they ask for a good cgredit history, they typically mean a good credit history in the US.
Disclaimer: This is how I understand it... If I am wrong, plz dont hesitate to correct me.
HTH
Uday
HI Uday
Thanks for replying.
well I basically wanted things to ease out when I would be taking a loan in US. From what I read a good credit history in the home country would do well to secure a bigger loan on cheaper rates and with lesser hassles.
I do have a lot of co-signors in US but just wanted to know how far I could go on my own without putting them into the picture - for the simple reason that as co-signor to a loan exposure, it reduces their credit rating. So if possible I would like to go the whole hog all alone.
And the reason why I thought that the Indian credit could help/not help is because:
1) We all pretty much use Visa/Mastercard/Amex cards : and international at that too
2) The Indian rupee is very soon going to be freely convertible (i think within 1-2 years)
anyhow that is my thot on the matter.
I think I will discuss thing with my ppl in US and to the Indian Students on BW. Lets see if anything interesting comes up.
Thnx for the post again
Cheers
Kunal
On a different aspect, I had a question. I have already taken 2 loans for my car and house in India. Will this have any bearing if I taken another (non-collateral or collateral) loan from India ?
Arun
Hi Arun
your credit history would be dependent on your punctuality in repaying the regular instalments. also a person with a lot of exposure already and out of job (during your MBA) could be a potential red flag. maybe it wud be better if you talked it over with the banks offering you the loans (in US/India).
Also you can also not show these assets against your new loans. Cause these items legally can not be taken as collateral till you repay the loans. In any case you wouldn't have the ownership documents with you.
so you might wanna take a serious look at this aspect.
disclaimer: my personal opinion. and on that only i have refrained from taking any loans for vehicles or sorts.
Cheers
Kunal
On a different aspect, I had a question. I have already taken 2 loans for my car and house in India. Will this have any bearing if I taken another (non-collateral or collateral) loan from India ?
Arun
Ya Arun, it wud have a bearing. Because ur earlier loans will have an impact on ur repayment capacity. Banks have a formula by which they calculate ur replayment capacity, and it obv factors in ur loan-repayments. And more so if you are going to be out of a job! 😃
Hi All
below is a reply I got from a BWer on the topic
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Right, you cannot really have a credit history in the US until you get an SSN number. So, for the first while after you arrive in the states youll have to rely on cash or your cards from home.
I however find credit cards fantastic cash-flow management tools + great way to get free trips, etc.
Anyhow, I do not think the credit history from your country matters much in the US or any other new country you might move to. I helped a few friends get situated when they first came over to the states during University time. The best thing to do once you get an SSN number is apply for a credit card --- they throw them at college students. Granted, youll get a $500 limit and 20% rate to start, but use it, pay it off every month and soon your limit will go up. In time, you will be able to get a mobile phone contacts, car loans, etc, etc.
Check with the schools to which you are applying/accepted, they all seem to offer assistance and advice on getting loans.
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hope it helps others too
Cheers
Kunal
Another reply on BW.
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For most types of your loans like auto loans etc, your interest rate with high.. in the range of 12-15%. However, student loans are more often sponsored by the University and available at standard rates, most likely at Prime. It depends on the school you attend. I think Citiassist is a very common loan facility which is available at Prime and is a variable rate loan. As a student you may be able to get a student credit card with 500$ limit. Use it regularly and improve your credit score. If you plan on living in US after school, having a good to great credit score is extremely important
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Cheers
Kunal
Well just though I would mention one of the most importnat factor which is quite often neglected. i.e the current salary. If one is are asking for a loan which is what he/she will earn in 10 years in his/her current job/pay then the banks wont be too comfortable.
And the person is only partially correct saying that your credit history in the previous country doesnt matter. Personally I took a friends from India to Wells Fargo(while I was in the US) and got her a credit card based on her Indian "Standard charted" credit card 7 her employee id.
-Amit
Hi Amit
I have doubts on the current salary thing. From what I cud gather from all the loan programmes they do not consider your present salary because that is not what you are going to stick to after your MBA.
Future is always discounted by this method. just my 2 cents.
also, when you got her the credit card, wasn't she still on the rolls of the company? but we wudn't be when we wud be joining our MBA.
I guess things wud be different for ppl out of their jobs.
But personally I think a personal credit card with a sufficiently large limit (in the home country) shud be able to sway things in our favour. what do you think?
Cheers
Kunal
Hi Kunal,
The bankers do consider your current salary because as a banker they have to always worry about defaults. What if a person doesnt get a new job after his/her MBA. This would lead to a default of the loan and the bank loosing money. I am talking about unsecured loans ehre not loans against collateral/cosigners.
As for the credit cards well if I get a credit card anywhere from the world I can just ask a banker friend to find out how much the limits are, how much is the outstanding. And this all translates into credit. And yeah the employee id in the US is not required to prove Ur current slary(no bank or credit card company ever asked me my salary(unlike india, where every tom/**** and harry does)). Its only used as ID proof.
-Amit
Hi Kunal,
The bankers do consider your current salary because as a banker they have to always worry about defaults. What if a person doesnt get a new job after his/her MBA. This would lead to a default of the loan and the bank loosing money. I am talking about unsecured loans ehre not loans against collateral/cosigners.
As for the credit cards well if I get a credit card anywhere from the world I can just ask a banker friend to find out how much the limits are, how much is the outstanding. And this all translates into credit. And yeah the employee id in the US is not required to prove Ur current slary(no bank or credit card company ever asked me my salary(unlike india, where every tom/**** and harry does)). Its only used as ID proof.
-Amit
So anybody earning INR 30 K over here in India would be expected to return a loan of INR 60 lacs. and that it wud make a difference if somebody earned 25 K and that that wud make it a potentially higher risk of return?
You could be right, but it seems too trivial an annual difference to make any significant shift in the analysis.
Cheers
Kunal
Yup 25K and 30K wont make a diference but 25K and 1 lac will make a diference. For example a person with a 1 lac income might be able to keep 50K out for loan repayments.
For a 42 lac loan for 10 years at 7.25% the EMI works out to 49K.
-Amit
Credit History is not built just on the basis of credit cards and its payments. In US you build a credit based on several other factors.
You come to US and its true that u need to get an SSN but these days not everyone gets an SSN.
Well to start with, you can always get a secured credit card. Financial institutions have no issues giving you that.
And you build up your credit history with other factors like paying for your utilities. Like if you are going to share apartment, make sure you have your name on the lease and have the utilities on your name.
Credit History is not built just on the basis of credit cards and its payments. In US you build a credit based on several other factors.
You come to US and its true that u need to get an SSN but these days not everyone gets an SSN.
Well to start with, you can always get a secured credit card. Financial institutions have no issues giving you that.
And you build up your credit history with other factors like paying for your utilities. Like if you are going to share apartment, make sure you have your name on the lease and have the utilities on your name.
interesting..
so are you saying that:
3 people share an apartment and utilities but i get the bills in my name and charge them thru my card. others pay to me in turn. that way i improve my credit record?
not a bad idea.but i guess i have to take some 2 innocuous ppl for the job. that wud exclude all crafty indians. they are sure to hit on this idea themselves
:oha:
interesting..
so are you saying that:
3 people share an apartment and utilities but i get the bills in my name and charge them thru my card. others pay to me in turn. that way i improve my credit record?
not a bad idea.but i guess i have to take some 2 innocuous ppl for the job. that wud exclude all crafty indians. they are sure to hit on this idea themselves:oha:
Well you need not charge on your CC, you can pay by check, its all done based on you SSN or TIN #. And ye there are tons of utilities to take care of in US, you just name it and it goes into your record.
On an unrelated note - I have a SSN, but it says "For Work Only". So, when I go to the US this fall for studies, do I need to get it re-issued? I understand that an SSN is issued only once per person in his/her lifetime...just wondering how it would work out.. any ideas folks??
interesting..
so are you saying that:
3 people share an apartment and utilities but i get the bills in my name and charge them thru my card. others pay to me in turn. that way i improve my credit record?
not a bad idea.but i guess i have to take some 2 innocuous ppl for the job. that wud exclude all crafty indians. they are sure to hit on this idea themselves
Well you need not charge on your CC, you can pay by check, its all done based on you SSN or TIN #. And ye there are tons of utilities to take care of in US, you just name it and it goes into your record.